Banks block cards after security scare - UPDATED

Beverley Head
Friday, 27 May 2011 15:43

Business IT - Security

Leading Australian banks have blocked thousands of customer credit cards after a potential security breach was uncovered. While the banks have gone secret squirrel about which merchant or network was to blame, an eftpos terminal in a small business is understood to be at the root of the problem.

Westpac, Commonwealth Bank, NAB and ANZ were all at pains to stress that it was not their systems to blame, but that they had over the last couple of days implemented bulk blocks of card use in order to protect customers as word of the breach filtered out.

While none of the banks will say which merchant or network was at the eye of the security storm, an ABC radio report at lunchtime suggested that the problem had arisen in an Eftpos terminal being operated in a small business and connected to the St George network.

However a St George spokesman said that; 'There has been no compromise of St George Bank systems or security. We don't comment on the name of the merchant'

The bank had however; 'Blocked a small number of cards as a result of a compromise affecting a business.' He added that; 'Customers will not be liable for any fraud related to their accounts and can contact St George if they have any concerns regarding transactions on their accounts.'

Meanwhile the Commonwealth Bank has alerted 8,000 of its customers via SMS, email and letter of the potential card breach and is now replacing them as a matter of priority. The bank issued a media release noting that it; 'continuously monitors all credit card transactions to protect our customers from fraud and during this process we became aware of a potential credit card compromise through an Australian merchant acquired by another bank.'

The CBA said MasterCard and Visa were alerted to the compromise and also the bank involved. Affected CBA cards are being reissued and the bank has said customers would be reimbursed and any fees refunded as a result of the issue.